3062 - execut sum - namibia re phase 2 - revision after bilateral april 27w colour coding1

7/30/2019 3062 - Execut Sum - Namibia RE Phase 2 - Revision After Bilateral April 27w Colour Coding1

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GEF COUNCIL SUBMISSION

AGENCYS PROJECT ID: 3062GEFSEC PROJECT ID: 2256COUNTRY:NAMIBIAPROJECT TITLE: BARRIERREMOVALTO NAMIBIAN RENEWABLE

ENERGY PROGRAMME (NAMREP) -PHASE II

GEF AGENCY: UNDPOTHEREXECUTING AGENCY(IES):

DURATION: 2.5 YEARS (PHASE I), 2.5 YEARS (PHASE 2)GEF FOCAL AREA: CLIMATE CHANGEGEF OPERATIONAL PROGRAMME: OP-6

GEF STRATEGIC PRIORITY:CC-2 (ACCESSTO LOCAL SOURCESOF FINANCING)CC-4 (PRODUCTIVE USESOFRENEWABLE ENERGY)

PIPELINEENTRYDATE: 06/99ESTIMATED STARTING DATE: PHASE II: DEC. 2006IA FEE: USD 234,000

CONTRIBUTION TO KEY INDICATORS OF THE BUSINESS PLAN:

The increased sales of solar energy technologies (SETs) due to NAMREPs intervention will result in avoidedgreenhouse gas emissions of approximately 233,700 tons of CO2-equivalent over the lifetime of the SET equipment(15 years). An estimate of the indirect impact of this project, resulting from the continuously growing sales of SETsafter the projects end, is in the order of 2.1 million tonnes of CO2.

RECORDOF ENDORSEMENTON BEHALFOFTHE GOVERNMENT

Ministry of Environment and Tourism, Director, Environmental Affairs Date: March 02, 2006Teofilus Nghitila

*Details provided under the Financial Modality and

Cost Effectiveness section** PDF B funds were provided for Phase I only

Approved on behalf of the UNDP. This proposal has been prepared in accordance with GEF policiesand procedures and meets the standards of the GEF Project Review Criteria for work programinclusion

Yannick GlemarecDeputy Executive CoordinatorUNDP/GEF

Project contact person: Mr. Martin KrauseUNDP-GEF Climate Change Regional AdvisorTel.: +27 12 354 8125; [email protected]

Date: 27 April , 2006

PROJECT EXECUTIVE SUMMARY

FINANCING PLAN (US$)

GEFPDF B 103,000**

Phase I - Project 2,600,000

Phase II- Project 2,600,000

Sub-Total GEF: 5,303,000

CO-FINANCING*

Government (cash) 2,155,000

Bilateral donors (cash) 1,355,000

Government (in-kind) 100,000

Co-financing-Phase I: 3,610,000

Government (cash) 755,000

Bilateral donors (cash) 4,781,000

Financial institutions (cash) 2,000,000Government (in-kind) 100,000

Co-financing-Phase II: 7,636,000

Subtotal Co- Financing: 11,246,000

Total financing Phase I 6,210,000

Total financing Phase II 10,236,000

TOTAL PROJECT FINANCING: 16,446,000

FINANCINGFOR ASSOCIATEDACTIVITIES:Baseline annual sales of solartechnologies

7,500,000
mailto:[email protected]:[email protected]


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1. PROJECT SUMMARY

1.PROJECTRATIONALE, OBJECTIVES, OUTCOMES, OUTPUTSANDACTIVITIES

Background and project rationale

1. Namibia is a very sparsely populated country. It is a lower middle-income country with a GDP percapita close to USD 1,800. However, this figure masks a skewed income distribution and a majorityof the population, particularly those in rural areas, live in conditions of relative poverty. Namibiashigh population growth has three main implications for the energy sector. First, not only does thebacklog in energy services for households needs to be corrected, but additional services need to beprovided for new households in both urban and rural areas. Second, the Namibias growing economywill require energy services to facilitate this growth. According to the 2005 Rural ElectrificationMaster Plan, only 1/3 of Namibias population has access to electricity (67% for urban areas and 10%for rural areas). Of Namibias 2,855 rural settlements, about 2,400 are non-electrified. Some 131settlements are officially designated as off-grid by the Master Plan, meaning that some 27,000households will not have access to the national grid for at least 20 years. The third importantconsideration relates to the impact of energy security and impact on the environment. Much of the

current conventional energy consumption relies on non-renewable hydrocarbon fuels of finitequantity, which have to be fully imported to Namibia, mostly from South Africa. Given the fact thatSouth Africa is rationalising its power industry and may reduce power exports to Namibia, thegovernment has indicated the possibility of sharp rises in grid electricity tariffs in the near future.

2. In this context, there is a clear scope for solar energy technologies (SETs) in the rural and also urbanareas of Namibia. The solar technologies with most scope in Namibia are solar home systems (SHS),solar water heaters (SWH), photovoltaic pumps (PVP) and also PV refrigeration. Currently, variousprivate companies provide these technologies that are mostly imported from USA, Europe or SouthAfrica. There is a clear demand for SHSs for households and small shops in rural areas (and a futurepotential for solar-hybrid mini-grid systems). Regarding water pumping, PVPs are competitive ascompared with diesel systems in cases of lower water delivery demand range. The market for SWHs

is in urban areas in households, commercial establishments and institutions and in rural areas inclinics, hostels and commercial farms.

3. Since the start of NAMREP Phase I in 2004 a market for solar energy technologies (SETs) has begunto develop. But the more widespread application of these technologies is still hampered by a numberof capacity, institutional, technical, financial, information and cultural barriers. As reported in thephase I evaluation report most barriers have been mitigated during the implementation of NamRepphase I though not yet fully removed.

4. Key achievements of phase I as documented in the evaluation report are as follows: Phase I hasprepared the ground by building technical, institutional, policy-making and entrepreneurial capacitiesand awareness raising. Quote from the evaluation report: Regarding NAMREPs performance our

conclusion is that the project has performed highly satisfactorily in capacity building and awarenesscreation as well as in financial barrier removal, but marginally satisfactorily in the policy-institutional barrier removal activities (although due to factors outside the scope of direct influenceof NAMREPs PMU, such as the delay in establishing the REEE Institute). If this dynamismcontinues in 2006, the evaluation team believes strongly that the Phase I of the project will have

performed more than satisfactorily. Therefore, NAMREP should be continued in a follow-up Phase IIwith a clear focus on implementation of financing and technology delivery and maintenancemodalities. As also reported in the evaluation report NAMREP has been very successful inrestructuring the Solar Revolving Fund (SRF) and setting up a financing scheme with a commercial

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Bank.

5. Market data on sales of SETs in Namibia underpins the success of NAMREP Phase I. Average annualsales of SHSs, SWHs and PVPs between 2001-2004 was 372 systems. In 2005 a total of 823 systemswere sold and in 2006 it is estimated that 1392 systems will be sold, based on extrapolation of salesfigures from the first quarter of 2006. Between 2004 and 2005 sales have more than doubled and thistrend is continuing into 2006. These are clear signs for a market upswing which can be attributed to

activities carried out under NAMREP Phase I such as awareness raising, training of technicians andmost importantly the restructuring of the SRF. After the restructuring of the SRF in the first quarter of2005 7x more loans have been awarded compared to the average in previous years. The followingtable summarizes the results from the market surveys carried out in 2005 and 2006. More informationfrom the market survey is included in annex F.

Table A: Total Number of SETs (SHS, SWH, PVP) Sold Per Year

Solar Home Systems 2001 2002 2003 2004 2005 2006*

CASH SALES 291 294 298 380 478 800

SALES SRF (LOANS) 068 81 42 33 345 592

TOTAL SALES CASH + LOANS 359 375 340 413 823 1392

* for 2006 sales are estimated based on data available for the first quarter of the year (Jan-March 2006)

6. Key indicators that were set at the beginning of phase I have been achieved or even surpassed as issummarized in Table B. Sales of SET systems have increased by 400%; the number of RET suppliershas increased by more than 600%; the number of customers enquiring information about SETs hasskyrocketed to more than 4000 compared to 22 in the baseline year. These are strong indications foran emerging SET market.

Table B: Results of Phase I as measured against Phase I indicatorsThree Key Indicators from Phase I Logframe Value in

baselineyear 2003

End of Phase1 target Value(Year 2006)as per 2004Logframe

ActualValue for

2006*

End of Phase2 target Value(year 2009) as

per 2004Logframe

Revisedtarget valueas per 2006Logframe

Total no. of RETs per year increases by 10%by end of Phase 1 and 50% by end of phase 2compared to baseline scenario.

358 394 1392 537 3580

Increase in RET suppliers outside Windhoekby 20% by end of Phase 1 and by 100% by theend of Phase 2

4 5 27 8 40

No. of customers enquiring information aboutPV and SWH from local dealer shopsincreased by 20% by the end of Phase 1 and50% by end of Phase 2 compared to Baselinescenario

22 26 4696 33 4696

* Estimated based on market data available for first quarter of 2006 (January March)

Project strategy and approach

7. The original USD 5,2 million, 5-year NAMREP project was split into 2 phases of 2,5 years durationeach. The project document and budget for the first phase (USD 2,6m) was endorsed by the GEFCEO in 2003. Subsequently, implementation of phase I activities started in 2004 and will go up to theend of 2006. An independent evaluation of the progress in Phase I was carried out in February 2006(NAMREP mid-term evaluation). The report recommends that, given the satisfactorily performance

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of Phase I, NAMREP should be extended into a second phase. This current submission to theworkprogramme of the June 2006 council meeting is for phase II of the NAMREP project, requestinganother USD 2,6 million to remove the remaining market barriers. The proposed Phase II will start bythe end of 2006 and continue for another 2.5 years.

8. In line with UNDPs adaptive management approach and GEFs learning culture adjustments to theimplementation strategy and monitoring framework (including indicators) have been made at 2

critical stages during implementation of phase I. Firstly, at the beginning of phase I the logframe wasrevised and SMART indicators were designed based on the originally proposed indicators. The newset of indicators allows quantitative measurements of progress and forms the basis of regular datacollection during project implementation. After the finalization of the indicators a baseline marketsurvey was commissioned to collect data that is relevant with regard to the selected indicators. Thesecond adjustment to NAMREP was made after the independent evaluation came up with a numberof recommendations. These recommendations have been carefully considered and now shape thedesign of the phase II strategy as presented in this proposal. For example: The independent evaluationrecommends that Phase II of NAMREP should focus more on the implementation of financingmodalities and developing the product supply chain (SET supplier/importer rural-based solarbusiness end-user) with targeted capacity strengthening activities and financial support mechanisms(supply side). More attention should also be given to development of the rural market for energy

services, especially productive uses of energy (demand side). The project strategy for phase II isbuild around those recommendations.

9. Phase II will continue to address the capacity, awareness and policy-institutional barriers, but willfocus on supporting innovative loan and grant mechanisms that will be extended through the SolarRevolving Fund (SRF) of the Ministry of Mines and Energy (MME), the Namibian banking sector(such as Bank Windhoek) and parastatal institutions (such as the development bank Agribank and thehousing delivery agent Namibian Housing Enterprise). The SRF provides soft loans for solar energytechnologies (SETs). Loans awarded by the SRF have risen to 345 annually after the restructuringcompared to 52 annually in average over the 3 years before the restructuring. In Phase I of NAMREP,an MoU was signed between MME and Bank Windhoek in which the bank provides a credit line forsmall solar energy entrepreneurs as well as personal loans for PVP, SHS and SWH at attractive

interest rates, made possibly by the partial guarantee provided by MME to the bank. The SRF andBank Windhoek credit schemes are described briefly in Annex D. In Phase II these credit schemeswill be scaled up with GEF support and replicated to other financial institutions.

10. NAMREP aims at expanding the use of SET's in three principal markets, namely:

SETs that substitute an existing conventional energy service, such as SWH for theprovision of hot water, replacing electric geysers, and PVP in commercial farming, replacingdiesel pumps;

SETs for the off-grid rural markets, such as SHS and PVP in farming households toprovide a new modern energy service for social uses (lighting, radio/TV) and productive uses(farming, small rural businesses, cold beverage shops);

PV applications (SWH, PVP and SHS) in public institutions (e.g. schools, clinics, and

police posts) for lighting, radio/TV, refrigeration and telecommunications.

11. Regarding the first market, Phase II will continue to raise awareness on the benefits of using solarwater heaters (in public institutions and electrified households) and PVP for commercial farming vis--vis conventional solutions and electric geysers). Here, the issue is substitution of an already existingenergy services (electric geysers and diesel-powered water pumps) with sustainable energy options(solar water heaters and solar PV pumps). The public or private building owner and commercialfarmers need to be convinced that SWHs and PVPs are cost-effective technologies and, where theinitial investment cost is a barrier, need to be helped with a commercial loan facility, such as by theSRF or Bank Windhoek schemes.

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12. Special attention will be given in Phase II in developing the rural market for solar energytechnologies. In the past some demonstration projects were implemented with very limited impact.The bulk of the market for SETs will have to build around commercial activities with the privatesector engaging in sales and after-sales. First, it is important to strengthen the supply chain from SETsupplier (mainly based in Windhoek) to locally based technicians and small solar energyentrepreneurs down to the end user. This implies providing technical and entrepreneurial training to

rural-based technician to expand their services into small solar energy businesses that sell SETs to alocal market they know well and by providing a maintenance service of sufficient quality. This supplychain needs to be backed up with appropriate credit facilities for supplier and rural solar entrepreneurand by facilitating interactions between SET supplier and the rural-based solar entrepreneurs.Second, it is important not only to remove barriers to the penetration of solar technology (supply side)but also barriers to the development of the market for social and productive uses of renewable energy(demand side). Here the first cost barrier is of particular importance. Most rural people cannot easilyafford any of the modern energy technologies (neither cash nor conventional loan schemes), butsocial acceptability will be higher if SETs generate income, by linking up with productive activities(such as the use of PV in agriculture, e.g. productivity increases by solar-powered irrigation or smallrural enterprises, e.g., cottage industries, small shops,shebeens).

13. The third market is formed by the public sector that has to optimise its recurrent and capitalexpenditures over full life-cycle cost with full considerations for SET options, such as SWH in urbanand rural public buildings (e.g., in school hostels and clinics) and PV application in rural services(education, clinics, police stations, communications).

Project goal and objective

14. The goal to which the project contributes is to increase affordable access to sustainable energyservices thus contributing to climate stabilization by reducing or avoiding CO2 emissions andimproving livelihoods and income generation of rural people.

15. This project objective is to promote the delivery of commercially, institutionally and technically

sustainable energy services by solar energy, including solar electricity production (for off-gridlighting, radio, TV, water pumping, and refrigeration) and solar water heating to the household,institutional, commercial, and agricultural sectors.

Project outcomes and outputs

16. The mid-term evaluation recommends rationalising the original list of 6 components (NamRep PhaseI) into 4 components (1. capacity building, 2. policy-institutional, 3. awareness and socialacceptability and 4. financing and product delivery schemes) plus adding a new component onlearning, evaluation and adaptive management. Therefore, the proposed project for phase II has 5main components each composed of 1 outcome, several outputs and associated activities that will

contribute to the removal of the identified barriers. The outcomes of the NAMREP project phase II,and the associated outputs, are listed below:

Outcome 1:Built capacity in public and private sectors and in NGOs1.1 Training programmes for public and private sector and NGOs have been established and

executed1.2 Decentralized RET companies are adequately supported1.3 Vocational and training centres are capacitated and providing technical training on SETs

Outcome 2:New policies, laws, regulations and actions in support of renewable energy are in place

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2.1 Policy and regulatory frameworks for renewable energy and off-grid electrification areformulated

2.2 Government ministries and public institutions finance and implement solar technologies andprojects

2.3 The REEE Institute is established at the Polytechnic of Namibia and functioning well

Outcome 3:Increased public awareness and social acceptability amongst stakeholders

3.1 Comparative information on cost and benefits of SETs is developed3.2 Increased knowledge of SETs among potential end-users and national and regional decision-

makers3.3 Active networks or associations of stakeholders are in place

Outcome 4: Appropriate financing and product delivery schemes set up and expanded.4.1 The Solar Revolving Fund (SRF) has been scaled up and expanded4.2 Financing schemes through (semi)-commercial financing institutions for customers and solarentrepreneurs have been set up and/or scaled up

Outcome 5: Learning, evaluation and adaptive management5.1 Adaptive management, monitoring and evaluation

5.2 Lessons learned are documented and disseminated

2.KEYINDICATORS, ASSUMPTIONSANDRISKS

17. Key indicators of success for the project include those listed below. NAMREPs Logical Frameworkhas been revised at the beginning of phase I and then again during the design of phase II with updatedindicators for project performance and impacts, reflecting the experiences gained in Phase I. As muchas possible indicators used in phase I will also be used in phase II thus assuring consistent tracking ofimpacts over a longer time span.

Environmental:

Avoided emissions of greenhouse gases due to the application of SETs and reduced dependenceon imported electricity and fossil fuels from South Africa. Direct reduction in CO2 emissions is anestimated 233,700 tCO2

Market:

Substantial increase of sales of SETs

Economic and social:

Enhanced livelihood and income generating opportunities in rural communities

Energy and cost savings for public institutions, urban households and commercial farmers

Empowerment of local solar technicians and enabling them to set up small solar businesses

Capacity building, awareness creation and knowledge dissemination:

Strengthened capacity in the operation, maintenance and after-sales services on solar technologies

Strengthened capacities of stakeholders from government, private sector and NGOs inidentifying, promoting, marketing and investing in solar energy technologies

Strengthened capacity of training institutes to provide courses on solar energy technologies

Increased awareness and acceptance by the end-users of SETs for social and productive uses

Policy-institutional:

An enabling policy and regulatory framework with consolidated plans for the promotion ofrenewable energy and off-grid electrification

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Adoption of rules of the game (codes of practice, norms and standards) by the private sector andthe Government

Willingness of decision-makers to base decisions on SETs on the knowledge acquired

Financial:

Strengthening and capitalisation of affordable credit schemes for small solar entrepreneursand for customers in public and private financial institutions

A strategy to reduce the first cost barrier of SETs is in place

18. Important project assumptions are:

Fuel and power prices will slowly go up

Long-term financial and political support of the Government and its institutions, in particularMME

Active interest of end-users in acquiring SETs

19. During the project design stage, project risks have been closely analysed and mitigation strategieshave been incorporated. However, while the project is designed to minimize these risks, some issuesare not entirely within the projects control but may affect project implementation. These risks arelisted below.

Policy-institutional:

Despite the looming power shortage, renewable energy fails to become a Government priority

While co-financing from MME for the direct interventions of NAMREP is assured, thesustained long-term contribution and larger-scale expansion of the Governments financialresources for renewable energy and off-grid electrification fails to materialize

Social, market and financial:

Due to the remote location and low population density, SETs may be difficult to supply andmaintain in Namibias rural areas, access to financing for remote communities may be difficult,while the markets for products and services of the productive uses of energy may be too small or

situated too far away from other markets The interest of PV suppliers and financial institutions to develop the rural PV market bycooperating with local agents (technicians, small solar entrepreneurs) may shift to other markets

2. COUNTRY OWNERSHIP AND DRIVENNESS

A. COUNTRYELIGIBILITY

20. Namibia is eligible for GEF financing and ratified the UN Framework Convention on ClimateChange (UNFCCC) in 1995.

B. COUNTRYDRIVENNESS

21. In Namibia, the Ministry of Environment and Tourism (MET) coordinates the formulation,implementation and follow up of the national environmental policies and programmes. MET acts asboth the UNFCCC focal point and the GEF Operational and Political Focal Point. The proposedproject is relevant to the ongoing MET climate change programme, in particular to its efforts todevelop a national mitigation plan and support the development of technologies that reduce GHGemissions, including renewable energy technologies.

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22. The Ministry of Mines and Energy (MME) facilitates and regulates the responsible development andsustainable utilization of these resources. Within the Ministry, the Energy Directorate is responsiblefor renewable energy research and implementation of renewable energy projects. The Ministry ofMines and Energy established the Energy Policy Committee (EPC) to drive the policy makingprocess and the development of an Energy Policy White Paper in 1998. As a framework for energypolicy, the White Paper formulated the following goals: effective governance, security of supply,social upliftment, investment and growth, economic competitiveness and efficiency, and

sustainability. The strategy regarding renewable energy can be summarised as follows: Development challenges. There is an urgent need to provide improved access to betterenergy services in rural areas. There is strong demand for electricity for lighting and smallappliances by households and public services as well as for water pumping, given the fact thatNamibias water resources are scarce. This need can often be met by solar home systems andsolar water pumps as least-cost solutions, complementary to grid electrification. Water heating inurban areas makes extensive use of electric geysers that can be replaced by solar water heaters.Harnessing the countrys solar, biomass and wind resources for grid-connected power generationwill increase the countrys dependence on imported power and improve environmentalsustainability.

Institutional challenges. At present renewable energy is on an unequal footing withconventional fuels and electricity. Key institutional challenges include the establishment of an

adequate policy and planning framework, development of human resources and public awareness,adequate financing schemes and improved cooperation between ministries and public institutionson renewable energy.

3. PROGRAMME AND POLICY CONFORMITY

A. FITTOGEFOPERATIONALPROGRAMMEANDSTRATEGICPRIORITY

23. The activities proposed under NAMREP will remove important barriers to the adoption of renewableenergy technologies for off-grid applications (solar home systems and solar water pumping) and ofsolar water heaters, including information, technical, institutional, policy-regulatory and financial

barriers. NAMREP is fully consistent with the GEF Operational Programme 6, Promoting theAdoption of Renewable Energy by Removing Barriers and Reducing Implementation Costs.

24. The project will contribute to the following GEF Strategic Priorities:

CC-2, Increased Access to Local Sources of Financing for Renewable Energy andEnergy Efficiency

CC-4 Productive Uses of Renewable Energy

25. The total CO2 reduction directly attributable to the proposed GEF initiative is 233,700 tonnes of CO2over 15 years. Total GEF investment is US$ 5.2 million, hence the unit abatement cost of the GEFintervention will therefore be 22 US$ per tonne of CO2. The indirect CO2 emission reduction due toreplication is an estimated 2.1 million tCO2.

B. SUSTAINABILITY (INCLUDINGFINANCIALSUSTAINABILITY)

26. Institutional Sustainability : To ensure sustainability of the project results upon completion of theproject, MME, the new REEE Institute and also the new Sustainable Energy Association (SENS) willcontinue to play the role of prime movers in policy formulation and planning as well as promotionand implementation of renewable energy activities in Namibia. By attaching middle-level managersand technicians to the PMU and seconding MME staff to the PMU the project shall have trained a

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pool of experts whom the MME, REEE Institute and the private sector may re-deploy for their ownlong-term renewable energy activities. There are various options for the continuation of the PMU atthe end of this project, for example, the unit may continue in MME, it may be taken over by theREEE Institute or staff will go to private and non-governmental organisations. Appropriate decisionswould be made before the end of the project.

27. Institutional mechanisms for this continuity are provided through the steady flow of funds into

capacity building, awareness raising and other barrier removal activities that creates an enablingenvironment in which the market for solar energy services can thrive, driven by the demand in theurban areas (solar water heaters) and rural areas (solar home systems and solar water pumping).

28. Financial Sustainability : The foundation for financial sustainability has been laid in phase I throughthe restructuring of the SRF and the signing of a MoU with a commercial bank (Bank of Windhoek)putting in place a credit guarantee scheme. During NAMREP phase I the SRF has been completelyrestructured which resulted in an increase of loans for the purchase of SHSs, PVPs and SWHs ofapproximately 700%1. This is considered a key achievement in order to overcome the high first costbarrier. The restructured SRF needs to be further supported during phase II to ensure long-termfinancial sustainability of the fund. The success of the SRF is resulting in rapid decapitalization.For 2006 it is likely that the demand for loans cannot be met. Sufficient capital needs to be provided

to meet the rapidly increasing demand for loans. NAMREP Phase II will provide technical advice andcontribute to capitalization so that sufficient working capital is available. Activities under outcomes 4of the phase II proposal suggest to continue strengthen the SRF technically and financially. After theend of phase II the SRF would continue to operate as a revolving fund using funds from the recoveredloans to award new loans to customers. Annex D describes in some more detail the success story ofthe SRF.

29. In addition to the restructured SRF another financing scheme has been set up during phase I toaddress the financing barrier and ensure long-term financial sustainability. A MoU was signed inFebruary 2006 between MME and the Bank of Windhoek in which the bank provides a credit line forsmall entrepreneurs as well as personal loans for PVP, SHS and SWH at attractive interest rates,made possible by the partial guarantee provided by MME to the bank. In Phase II these credit

schemes will be scaled up with GEF support and replicated to other financial institutions such as thedevelopment bank Agribank and the housing delivery agent Namibian Housing Enterprise. Activitiesunder outcome 4 of the phase II proposal and annex D describe this in more detail.

30. SET Market Sustainability : NAMREP will provide business support services for the private sector,especially the development of rural-based solar technicians into small entrepreneurs (RE SMEs).These RE SMEs are an essential link in the supplier/RE SME/end-user chain, by providing productsand services in the rural market that they know well. Thus sustainability essentially lies in thestimulation of market mechanisms that allow the penetration of SWH and PVP as a least-costalternative for electric geysers and diesel pumps and of PV as an off-grid electrification option.

31. In addition to strengthening credit schemes and making these more affordable for (rural) low-income

groups, NAMREP will focus on productive uses of energy in rural areas. Additional incomegenerated at the local level will allow end users to pay more easily for the energy services providedby SETs, while development of the productive use itself will improve the livelihoods of ruralhouseholds.

C. REPLICABILITY

1 Average number of loans awarded by the SRF per annum between 2001 and 2004 was 52; in 2005 345 loans havebeen awarded.

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32. The replicability of the project hinges on the projects ability to clearly demonstrate the financial andsocial benefits of solar energy. While Phase I focused on removing barriers through capacity building,institutional strengthening, policy planning, public awareness and information dissemination, thestrategy of Phase II will shift to transforming the market by creating a favourable enablingenvironment (including an appropriate policy and regulatory framework for RET and off-grid energyand) and promotion of affordable financial guarantee and loan schemes for SETs. Privateentrepreneurs can then seize the opportunity of a transforming market and take over the investment

process to develop win-win models in which end users have willingness to pay for the initialinvestment and cost of maintenance of the SETs. Thus the NAMREP project focuses on developingand facilitating market-oriented financing and product delivery modality that will allow stakeholdersto invest in renewable energy. It is expected that not only PV suppliers (based in Windhoek), butespecially their agents, the small RE entrepreneurs based in the rural areas, will expand their businessand that more rural-based technicians will develop their services into a viable solar energy business.

33. Finally, the replication of the projects results will be promoted through active dissemination oflessons learned. NAMREP actively works on information dissemination and public awarenessenhancement activities, in the form of public exhibitions, multi-media presentations, dissemination ofpublic information, and conduct of training courses, seminars and workshops. This means also thatthe project will engage in an active dialogue with similar GEF and non-GEF projects, particularly in

Southern Africa, to both share the Namibian experience and learn from others.

D. STAKEHOLDERINVOLVEMENT

34. NAMREP is promoting effective partnership arrangements for the implementation of solar energytechnologies with the relevant stakeholders, such as RE entrepreneurs and technicians, financialinstitutions, stakeholders from the national and local government and, last but not least, the end-usersof the technologies. Relevant stakeholders include:

Government ministries and institutions: Ministry of Mines and Energy, Ministry ofEnvironment and Tourism, National Planning Council, Ministry of Finance, Ministry ofAgriculture, Water and Rural Development, Ministry of Trade and Industry, Ministry of Higher

Education, Training and Employment, Ministry of Works, Transport and Communications,Ministry of Women Affairs and Child Welfare, Solar Revolving Fund (managed by KongaInvestments), Regional Councils

NGOs and parastatals: Gobabeb Training and Research Centre, Desert ResearchFoundation of Namibia,Namibia Nature Foundation, Ibis, Namibia Wildlife Resorts, NamWater,Telecom Namibia, Habitat Research and Development Centre, Agribank, Electricity ControlBoard, NamPower, Regional electricity distributors, National Housing Enterprise

Capacity building organizations: Polytechnic of Namibia, University of Namibia,Windhoek Vocational Training Centre

Financial institutions:NedBank, Bank Windhoek, First National Bank

Donor agencies: Denmark, Finland, UNDP

Private sector and individuals: Private housing developers, RE suppliers (e.g., Solar Age,Soltec, NEC), RE technicians, Namibian breweries, Engineering and consultant bureaus (CSA,EmCon, Craddle)

Users (households, building owners, communal farmers, commercial farmers)

35. NAMREP Phase I has established effective partnership arrangements for the implementation of PV,SWS and PVP technologies with RE entrepreneurs and technicians, financial institutions andstakeholders from the national and local government. NAMREP has encouraged the establishment ofa renewable energy association and in 2006 the Sustainable Energy Namibian Society (SENS) wasformally established. NAMREP works pro-actively with financial institutions, such as the Bank of

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Windhoek and MMEs Solar Revolving Fund, on financial mechanisms and with entrepreneurs tolook at the reduction of investment cost in RET equipment.

36. In Phase II, NAMREP will continue to cooperate with the REEE Institute, which is a newlyestablished networking organisation on renewable energy and energy efficiency at the Polytechnic ofNamibia with the objective of coordination and promotion of activities in the area of renewableenergy and energy efficiency. DANIDA provides co-financing support through the REEECAP project

that is complementing NAMREP. REEECAP is implemented by the Polytechnic of Namibia andfocuses on (a) strengthening the capacity of REEE Institute, (b) efficient use of energy in low-costhousing and (c) capacity building on renewable energy, energy efficiency and rural development.REEECAP was scheduled to run in parallel with NAMREP Phase I, but only started operating in2006. Although administration of the REEECAP and NAMREP projects is separate, NAMREP andREEECAP will liaise closely and harmonise execution of activities. REEECAP itself will workclosely with two NGOs, namely the Desert Research Foundation and the Habitat Research Centre.

37. The Ministries dealing with water supply, health, education, public works, police, and agriculture, allhave infrastructural development programmes that provide energy services such as lighting,refrigeration, water-pumping and warm water, which could be undertaken using SETs. As such theinvolvement of the ministries is essential if the project is to successfully integrate the use of solar

energy technologies throughout the public sector. The regional electricity distributors (REDs) areinvolved in the provision of rural electricity and the breadth of their extension of technical andadministrative infrastructure throughout Namibia will also contribute to a successful outcome of theproject.

38. The National Housing Enterprise (public) and private housing developers have expressed interest insolar water heating in the houses they develop. Private banks, such as Bank Windhoek, are activelycontributing to the project by means of the implementation and marketing of financial instruments forpuchasing SETs and supporting solar entrepreneurs.

E. MONITORINGAND EVALUATION (M&E)

39. NAMREP is being monitored and evaluated according to standard UNDP rules for nationallyexecuted projects. The Project Management Unit (PMU), under direct responsibility of the ChiefTechnical Advisor (CTA) elaborates and provides key M&E documentation. The PMU is responsiblefor continuous updating and reporting of financial and progress information. Specifically, a quarterlyreview and reporting cycle has been established in Phase I with the delivery of financial and progressreports as well as updated work plans (called Strategic Planning Matrices). As in Phase I, thedocumentation is subject to approval, potential adjustments and subsequent implementation in theregular meetings held by the Project Steering Committee. In these meetings, any bottlenecksoccurring in the implementation are addressed and resolved. One of the initial activities for the firstStrategic Planning Matrix of Phase II will be to specify appropriate performance benchmarks toenable effective M&E of project progress and to create a sound basis for informed management

decisions.

40. NAMREPs Logical Framework has been revised with updated indicators for project performanceand impacts, reflecting the experiences gained in Phase I (see Annex B). As much as possibleindicators used in phase I will also be used in phase II thus assuring consistent tracking of impactsover a longer time span. A baseline market study was completed in 2005, which sets baseline dataand values against which progress will be measured till the end of phase II. The first update of thebaseline study was done in April 2006 to monitor the development of the market and collect data forkey indictors. Values for each indicator will be collected each year in the Strategic Planning Matrixand also as input in the APR-PIR. In addition, the performance of the solar energy market will be

11


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constantly monitored so that the contribution of NAMREP can be evaluated in its appropriate context.Adaptive management that responds to changing circumstances in the context of the project will beencouraged, subject to approval by UNDP.

4. FINANCIAL MODALITY AND COST EFFECTIVENESS

A. FINANCIALMODALITY

41. The total budget for Phase II is US$ 10,200,000 with US$ 2,6 million from GEF and US$ 7,6 co-financing contributions, as indicated in the following table:2

42. NAMREP (Phase I and II combined) is expected to cost US$ 16,446,000 of which US$ 5.2 millionwill be contributed from GEF, US$ 2.6 for Phase I (which has been spent already) and US$ 2.6million for Phase II. In addition, GEF contributed US$ 103,000 in the formulation of the NAMREPPhase I proposal (PDF B). The GEF contribution will be used to address the various barriers thathamper the more widespread application of solar energy technology in Namibia.

43. A total of US$ 11,246,000 will be available as co-financing of the project activities in the Phases Iand II of NAMREP, as is detailed in the tables below:

2 Funds for Phase I have been approved by the GEF council in 2003 and have been spent during NAMREP phase 1,2004-2006.

12

Grand total Total

Outcomes GEF Phase 1 Phase 2 Co-financing Phase 1 Phase 2

1 Capacity building 2,220,300 830,300 580,000 250,300 1,390,000 1,075,000 315,000

2 Policy-institutional barriers 1,289,000 464,000 264,000 200,000 825,000 286,250 538,750

3 Public awareness 872,000 522,000 322,000 200,000 350,000 127,500 222,500

4 Financial and delivery models 9,426,000 1,600,000 400,000 1,200,000 7,826,000 1,700,000 6,126,000

5 Learning, management, M&E 2,638,700 1,783,700 1,034,000 749,700 855,000 421,250 433,750

TOTAL 16,446,000 5,200,000 2,600,000 2,600,000 11,246,000 3,610,000 7,636,000


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44. In terms of co-financing, the Danish contribute with US$ 2.51 million by means of the GobabebTraining Centre project (DKK 6 million) in Phase I and REEECAP (DKK 10 million) in the Phases Iand II3. The Finnish Government signed an agreement with the Ministry of Mines and Energy (MME)in February 2006 on a loan of 15 million for rural electrification, of which 3.0 million (US$ 3.6million)4 is destined for renewable energy.

45. In addition to a small in-kind contribution (estimated at US$ 200,000), MME makes a direct cashcontribution of US$ 2.91 million (for the Phases I and II) as follows:

MMEs Solar Revolving Fund, valued at US$ 2.2 million (which had cash balance of N$ 9million MME contribution as of end-2005 to which N$ 1.6 million will be added annually overthe 3-year period 2006-2008)5

MMEs support to the REEE Institute, costed at US$ 400,000 (N$ 1 million annually over a 2.5-year period

MMEs promotional activities, estimated at US$ 120,000 (over NAMREPs duration)

Operation of MMEs RE Unit (of which one staff is seconded to NAMREP on a permanentbasis), estimated at US$ 190,000 (over NAMREPs duration)

46. At least two schemes will be set up with private banks. In February 2006, an agreement was signedbetween MME and Bank Windhoek on setting up a credit scheme for small solar energy

entrepreneurs and a personal credit line for users, in which MME gives an 80% loan guarantee,enabling Bank Windhoek to provide loans at lower interest rates6. The annual value of loans isestimated to be US$ 2 million over the period 2006-20097.

3 Exchange rate: US$ 1= DKK 6.1699 (January 2006)4 Exchange rate: Euro 1 = 1.20 US$ (March 2006)5 Exchange rate: US$ 1 = N$ 6.14724 (January 2006)6 GEF supported this scheme through MME with US$ 300,000 micro-credit grant money.7 The Bank Windhoek will have an estimated amount of loans of N$ 2 million annually or NS$ 6 million

over the 3-year period 2006-2008 (Phase I: 2006, Phase II: 2007-2008), equivalent to US$ 0.98 milliondollars. It is assumed that new schemes in Phase II (e.g. with Agribank or NedBank) will add an equivalent

13

Name of Co-financier (source) Classification Type Amount (US$)

Danish Government Donor Cash 1,355,000

MME Government Cash 2,155,000

MME Government In-kind 100,000

3,610,000

Annual baseline sales of SETs Private Sector Sales cash 3,750,000

Name of Co-financier (source) Classification Type Amount (US$)

Danish Government Donor Cash 1,155,000

Finnish Government Donor Cash 3,626,000

MME Government Cash 755,000

RE financing schemes with banks Private Sector Cash 2,000,000

MME Government In-kind 100,000

7,636,000

Annual baseline sales of SETs Private Sector Sales cash 3,750,000

Assumptions:

Total Co-financing - PHASE I

Status

Letter available

Associated Financing

Depending on loans disbursed

Letter available

Total Co-financing - PHASE II

Co-financing PHASE I

Co-financing PHASE II

Associated Financing

Letter available

Status

Letter available

Letter available


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47. In addition, an amount of at least USD 7,500,000 is included as associated financing, which iscomprised of the baseline sales of SETs by suppliers to private and public clients, based on theaverage annual sales revenues of solar water heaters, solar PV and solar water pumps in Namibia overthe period 1999-2004.

B. COSTEFFECTIVENESS

48. The GEF contribution of US$ 5.2 million for NAMREP phase I+II represents a leverage of 1 to 3approximately. The fact that the Government of Namibia (directly and through donor countries) andprivate banks have pledged significant resources towards the incremental cost of the projectdemonstrates full ownership of the project and commitment to support solar energy technologyapplications in Namibia. To the total project budget of US$ 16.4 million, the baseline annual salesover the 5-year timeframe of around US$ 7.5 million can be added as associated financing.

49. The increased sales of solar energy technologies (SETs) due to NAMREPs intervention will result inthe avoided greenhouse gas emissions of approximately 233,700 tons of CO 2-equivalent over thelifetime of the SET installations (15 years). This implies a GEF contribution of US$ 22 per tCO 2

reduced. An estimate of the indirect impact of this project, resulting from replication (continuouslygrowing sales of SETs after the projects end) is in the order of 2.1 million tonnes of CO2.

5. INSTITUTIONAL COORDINATION AND SUPPORT

A. CORE COMMITMENTSAND LINKAGES

50. Namibias UNDP Country Office is fully committed to assist Namibia in facilitating access tosustainable energy services to rural poor. The frameworks for UNDP activities in sustainable energy

in Namibia are the Country Programme Plan (CP) and Country Action Plan (CPAP) 2006-2010.NAMREP is an essential component in the operationalization of these strategies, which mentionbarriers to the delivery of solar and biomass energy systems removed as one of the outputs. Finally,the proposed project is fully compatible with UNDPs mandate in assisting developing countries inreaching the Millennium Development Goals, particularly MDG-7 (environmental sustainability).

B. CONSULTATION, COORDINATIONAND COLLABORATIONBETWEEN IAS, AND IASAND EXAS, IFAPPROPRIATE

51. NAMREP and REEECAP will liaise closely and harmonise execution:

The Project Directors and/or project managers of REEECAP and NAMREP sit in each othersProject Steering Committee

An Advisory Committee is established for both projects with participation of key stakeholders(including other relevant line ministries, such as MAWRD, education and health, and theNational Planning Commission, as well as representatives from private sector and NGOs). Thisnot only ensures cooperation between the two projects but also stakeholder engagement in theprojects execution.

C. PROJECT IMPLEMENTATIONARRANGEMENT

amount as co-financing

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52. Phase II will be implemented by UNDP and executed by the Ministry of Mines and Energy on behalfof the Government of Namibia under the same arrangements as for Phase I. The MME and UNDPwill channel the contributions of the Government and GEF to the PMU for the implementation ofPhase II.

53. The structure and composition of NAMREPs project management is also the same as for Phase I.

The Project Management Unit (PMU), created in MME in 2004 under Phase I, is responsible forrunning the day-to-day operations of the project. The PMU is chaired by the MME Director ofEnergy, acting as National Project Director (NPD), and its activities are coordinated by the ChiefTechnical Advisor (CTA)/Project Coordinator and Deputy Chief Technical Advisor/National ProjectManager (DCTA), assisted by one project associate, two project assistants and one office assistant.The NPD and project associate are MME energy professionals, while the other posts are paid for bythe project. In addition, the PMU appoints consultants on short-term contracts.

54. A Project Steering Committee (PSC) is chaired by the MME Permanent Secretary and further consistsof MME officials (Director and Deputy Director of Energy), PMU management (CTA and DCTA), aswell as representatives from UNDP, the Ministry of Environment and Tourism (the GEF focal point)and the REEECAP project as well as any other person, nominated by the PSC Chairperson.

55. The mid-term evaluation report (NAMREP, Phase I) recommends that stakeholders should not onlybe involved in the various activities of NAMREP, but should be engaged, i.e. involved in its decision-making as well. An Advisory Committee will be established that serves as advisory body to both theNAMREP and REEECAP projects with participation of key stakeholders, including other relevantline ministries (MAWRD, education, health, police) and the National Planning Commission, as wellas representatives from private sector and NGOs.

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INSINANNEX A INCREMENTAL COST ANALYSISSTITUTIINSTITUTIONON

1.Project background

tit

56. The main objective of this initiative is to put mechanisms in place that will create a favourableenvironment for private entrepreneurs to seize the opportunity of a transformed market and take overthe investment process ensuring sustainability and replicability in the longer term. Theimplementation of the project will not only improve the commercial attractiveness of solar energytechnologies. It will also transform the market through capacity building, institutional strengthening,public awareness and information dissemination, provision of financial incentives, technicalstandardization and the implementation of successful SET delivery, maintenance, ownership andfinancing models.

57. The project also aims to (a) improve livelihoods and income generation opportunities of rural peopleby providing them access to off-grid solar energy technologies (for lighting, radio/TV, waterpumping, small electric tools and refrigeration) and (b) reduce the dependency of increasingly

expensive imported fuels by promoting solar water heating (to the household, and institutional andcommercial sectors) and solar water pumping in the agro-commercial sector. This can be achievedthrough the removal of capacity, institutional, public awareness and social acceptability, financial andtechnical barriers. The project incremental costs (to GEF) include these barrier removal activities aswell as funding the incremental costs associated with management and dissemination of experiencesand lessons learned. Five main groups of activities have been designed to remove the identifiedbarriers to increased and sustained development of small-scale solar energy applications. Theincremental costs related to the removing the barriers identified and summarized in the IncrementalCost Matrix.

TITUTIO

2. Incremental cost assessment

BaselineITUTI

58. In the baseline scenario, grid extension and diesel generators for off-grid power supply will continueto be the standard approach of the government, although at low coverage at the rural level, because ofthe vastness of Namibias rural areas and the increasingly large cost of power generation andimportation. Despite its potential, solar energy in Namibia will continue to be underdeveloped, notonly with substantial implications for local communities and the national government, but also for theglobal environment in terms of contribution to greenhouse gas emissions.

59. In the baseline scenario, the energy situation in Namibia will continue to be characterized by thefollowing aspects:

Households and/or communities will have no access to financial resources to developtheir locally available solar energy sources and families will remain dependent on the use ofinefficient technology (such as candles and batteries for lighting) as energy sources in ruralcommunities or adopt fossil fuel based technologies (such as diesel generators). This has theconsequence of limiting evening activities to a minimum and reducing opportunities for incomegeneration or improvements in the quality of education, health, and public service delivery (all ofwhich are significantly improved by a suitable supply of electricity).

Few government resources will be directed to SET investment, and the majority ofavailable resources will be dedicated to conventional grid extension. Private investment inrenewable energy will not occur because (a) solar energy systems are not perceived as an

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attractive investment, (b) the regulatory and institutional arrangements promoting solar energy tobe distributed are not in place, (c) the market demand for SETs remains small and (d) of the lackof adequate financing availability for SETs.

Project Goal

60. The goal to which the project contributes is to increase affordable access to sustainable energy

services thus contributing to climate stabilization by reducing or avoiding CO2 emissions andimproving livelihoods and income generation of rural people.

GEF Alternative

61. In the alternative scenario, GEF resources will result in leveraging financial and human resourcesfrom government, private sector, financial institutions, NGOs and end-users that will be used toimplement activities aiming at lowering the technical, capacity, financial and institutional-policybarriers mentioned before. This will allow the expanded use of solar and other sustainable energyservices and in the longer run to a noticeable market transformation.

62. The project is implemented in two phases. The first phase focussed on technical assistance to achievebarrier removal including considerable capacity building (in government, NGOs, finance, and othersectors), institutional development, reduction of financial barriers, building public awareness, andtechnological barrier reduction. These activities have paved the way for an acceleratedimplementation of the solar technologies impulsed by financing schemes for appropriate productdelivery mechanisms in the second phase. The first phase started in 2004 for a 2.5-year period until2006. The proposed Phase II will start by the end of 2006 and continue for another 2.5 years.

Systems boundary

63. The geographical boundary of the proposed full-sized project is the national territory of Namibia,covering both urban and rural areas.

Summary of costs

64. The total cost of the proposed GEF alternative is US$ 16,446,000, which divided in two phases:

Phase I: US$ 6,210,000, in which GEF finances the incremental cost of US$ 2.6 million

Phase II: US$ 10,200,000, in which GEF finances the incremental cost of US$ 2.6 million

65. The co-financing of both Phases of NAMREP consists of cash contributions of US$ 10.42 million,coming from the Government (MME), donors and private banks as well as a Government in-kindcontribution valued at US$ 200,000.

Global benefits

66. The increased sales of solar energy technologies (SETs) due to NAMREPs intervention will result inthe avoided greenhouse gas emissions of approximately 233,700 tons of CO 2-equivalent over thelifetime of the SET installations (15 years). An estimate of the indirect impact of this project,resulting from replication (continuously growing sales of SETs after the projects end) is in the orderof 2.1 million tonnes of CO2.

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INCREMENTALCOSTMATRIXFORNAMREP (PHASEIANDII)

BASELINE ALTERNATIVE GEF INCREMENT

OUTCOME 1

Built capacity in public, private sectors and NGOs

1.1 Trainingprogrammes forpublic and privatesector and NGOshave beenestablished andexecuted

Private and public sectorcapacity for qualityintervention with regardto SETs will be low,especially in rural areas

Increased human andinstitutional capacity tosustain a SE programme inNamibia

Staff from private sector,government officials andNGOs appropriately trained;Rural technicians have beentrained to provide acceptablequality services

1.2 Decentralised RETcompanies areadequatelysupported

Suppliers and financialinstitutions will not joinforces to build up afunctioning supplier rural technician/SME

end user chainCash sales of SETs (as iscurrently the case) willcontinue without muchgrowth, supplementedby small donor-fundeddemonstration projects

Local technicians havebeen strengthened into(emerging) RE businessesthat focus on rural clients,selling SETs and providing

after-sales service

Provide training on technicalaspects and business planningfor local solar technicians andsmall RE entrepreneurs

1.3 Vocational andtraining centres arecapacitated andproviding technicaltraining on SETs

Vocational training onSETs is weak or non-existing

Technology knowledge andhuman resource base on theinstallation of SETs,monitoring and after-salesservices has been improved

Assist training centres withcapacitating through provisionof earmarked courses

COSTTotal: US$ 0

Phase I: US$ 580,000Phase II: US$ 250,300

Total GEF: US$ 830,300

Danish: US$: 1,390,000

Total cost: US$ 2,220,300



REEECAP/ Gobabeb:

: US$: 1,390,000


OUTCOME 2

New policies, laws, regulations and actions in support of renewables are in place

2.1 Policy andregulatoryframeworks for REand Off-GridElectrification

Planning, let alonepolicy-making regardingSETs will not take place;Standards and codes ofpractice regarding SETswill not be developed

Recommendations from REand Off-Grid Plans areinputs into policy dialogueon RE;PV standards and codes ofpractices are formalised ina regulatory framework

RE Action and Off-GridMaster Plan are formulated;PV standards and codes ofpractice have been formulatedor strengthened

2.2 Governmentministries andpublic institutionsfinance andimplement solartechnologies andprojects

RE consideration willhardly be incorporatedinto planning;Initiatives on ruralenergy, RE andelectrification will beuncoordinated

Solar energy relatedactivities are integrated intonational and sectoraldevelopment plans,including the allocation offunding for theirimplementation

Assessments on how SETs canbe made part of sectoral andnational policy and planning;Decision-makers plan in amore integrated mannerregarding renewable energy

2.3 The REEE Instituteis established at thePolytechnic ofNamibia andfunctioning well

REEE Institutestrengthened, butwithout involvement inMME planning andpolicy-making

REEE Institutesubstantially strengthenedand ready to take over non-core activities from MME

REEE Institute substantiallystrengthened, in coordinationwith PMU

COST Total: US$ 320,000(MME support to REEE

Institute)


Total GEF:US$ 464,000




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REEECAP: US$ 505,000

MME cash: US$ 320,000


REEECAP: US$ 505,000

Total cost: US$ 969,000

OUTCOME 3 Increased public awareness and social acceptability amongst stakeholders

3.1 Comparativeinformation ondemand for andcosts and benefitsof SETs isdeveloped

Neither reliable data oncosts and benefits ofSETs (vs. conventionalalternatives), norcomprehensive data ondemand for energyservices in rural areasand SETs in generalexists

Technical and costscomparisons between SETsand conventional optionsare available and updatedas well as info on demandfor energy services andopportunities for social andproductive energy uses inrural areas

Analysis and surveys arecarried out to determinetechnical characteristics andcosts of SETs and theirapplication potential in urbanand rural areas

3.2 Increasedknowledge of SETsamong potentialend-users andnational and

regional decision-makers

Limited PR activitiestake place by MME andRET suppliers, but mostconsumers are not fullyaware of the potential of

utilising SETs as ameans of saving moneyor as a means fordevelopment and incomegeneration;National and regionaldecision-makers are notsensitised with respect tothe role of SETs inelectrification, energysavings and ruraldevelopment

Increased awareness withend users on costs andbenefits, where to sourceSETs and how to financethem (thereby creating a

necessary condition forincreased acceptance anduptake of SETs;Increased awareness andchanged perceptions withkey decision-makers(hereby creating a basis forthe policy frameworkbuilding of Component 2)

To develop targeted awarenessand information packages fordecision-makers and end-usersand organise appropriate waysof delivering these packages

3.3 Active networks or

stakeholderassociations inplace

Various stakeholders in

the RE sector shareinformation on anoccasional basis

The SE sector joins forces

to organise and lobby foractivities that could assistthe sector as a whole

Provide assistance for setting

up a renewable energyassociation or society inNamibia

COST Total: US$ 160,000(MME budget for

RE promotion)



MME cash: US$ 160,000REEECAP: US$ 190,000

Total cost US$ 872,000



REEECAP:US$ 190,000

Total cost: US$ 712,000

OUTCOME 4Appropriate financing and product delivery schemes set up and expanded.

4.1 The Solar Revolving Fund(SRF) has been

scaled up andexpanded

The success of the SRFis resulting in rapiddecapitalization. Thedemand for loans cannotbe met.

Sufficient capital isprovided to meet therapidly increasing demandfor loans

Provide technical advice andcontribute to capitalization

4.2 Financingschemes through(semi)-commercialfinancinginstitutions forcustomers andsolarentrepreneurshave been set upand/or scaled up

Financial institutionshave difficulty or notinterested in providingloans for SETs;Limited funds areavailable for end-usersand rural RE businesses

Financing mechanisms forend-users are available (forsocial and productive uses)as well as for rural-basedsmall RE entrepreneurs

Design, testing and scaling upwith GEF support of viablefinancing mechanisms withexisting financial institutions

COST Total: US$ 2,200,000 Phase I: US$ 400,000 Phase I: US$ 400,000


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(MME SRF) Phase II: US$ 1,200,000Total GEF: US$ 1,600,000

Finnish: US$ 3,626,000

SRF/banks: US$ 4,200,000


Phase II: US$ 1,200,000Total GEF: US$ 1,600,000

Finnish loan: US$ 3,626,000

Banks RE: US$ 2,000,00

Total cost: US$ 7,226,000OUTCOME 5 Learning, evaluation and adaptive management

5.1 Adaptivemanagement,monitoring andevaluation

Limited capacityavailable in MME todevelop, design andmonitor a solar energyprogramme

Increased capacity in MMEto sustain a SE programmein Namibia;Evaluation of the impact ofNAMREPs intervention(impacts have beenmeasured)

PMU/MME staff trained on-the-job to undertake SEproject activities;Design and study of baselineand target value of indicators(e.g., CO2 reduction, SETmarket development, socialand income generationimpacts), serving as a annualmonitoring and evaluation tool

5.1 Lessons learned aredocumented and

disseminated

No structured learningand dissemination

activities;Limited ability to learnand exchange infowithin and outsideNamibia

Lessons learned, especiallyon the financial and

delivery mechanisms,provide a basis for policy-making on RETs;Improved understanding onthe potential of RETs inelectricity supply and inrural development

Lessons learned documentedand a dissemination

mechanism is in place

COST Total: US$ 430,000(MMEs RE Unit)

Phase I: US$ 1,034,000Phase II: US$ 749,700

Total GEF: US$ 1,783,700REEECAP: US$ 425,000

MME: US$ 430,000


Phase I: US$ 1,034,000Phase II: US$ 749,700

Total GEF: US$ 1,783,700REEECAP: US$ 425,000


Total project Without the project, theenergy sector

development willcontinue to be based on

fossil fuels (diesel, gridelectricity). Off-grid

rural communities willlack access to modern

energy sources

Annual sales are 190

SHS, 100 PVP and 115

SWH systems;

Baseline emissions

avoided due to SETsales is 95,350 tCO2(over 15 years)

Directly resulting fromNAMREP, a path for

sustainable marketpenetration with SETs will

emerge;

Total sales over GEFsduration of 5 years are:

SHS: 3604, PVP: 784 andSWH: 1511 with a

combined CO2 emission

avoidance of at least

233,660 tCO2 (over a 15-

year period)

2,100,000 tons of CO2

will result indirectly from

project replication.

With a clear mandate topromote initiative including

positive global impact, GEFis supporting a valuable

effort to integrate globalclimate change and national

development and energysecurity aspects.

The availability of affordable

credit (n combination with

awareness campaigning), the

following systems are

installed annually in 3 years,

(2006-2009): SHS: 885;PVP: 95 and SWH:312 with a

combined CO2 emission

avoidance of 138,310 tCO2 ((over a 15-year period)

Total cost MME +SRF baselinebudget: US$

2,910,000

Baseline annual salesof SETs over 5

years are anestimated US$

7,500,000

Phase I: US$ 2,600,000Phase II: US$ 2,600,000

Total GEF: US$ 5,200,000

Danish: US$ 2,510,000

Finnish: US$ 3,626,000

RE banks: US$ 2,000,000

MME/SRF: US$ 3,110,000

Total cost: US$

15,820,000

Phase I: US$ 2,600,000Phase II: US$ 2,600,000

Total GEF: US$ 5,200,000

Danish: US$ 2,510,000

Finnish loan: US$ 3,626,000

RE schemes: US$ 2,000,000



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BASELINEANDEMISSIONREDUCTIONCALCULATIONS

Assumptions:

Emission factors SETs Emissions

avoided Price

SET system (tCO2/year) (US$, 2004)

- 50 W SHS 0.191 1,100

- 660 W PVP 2.524 9,000

- 200 l SWH 8.545 1,950

Source: UNDP-GEF project document NAM REP (Phase 1)

Emission calculation - baseline

Total sales Annual GHG GHG avoidance

over 5-year avoidance over 15 years

SET system period (tCO2/a) (tCO2)

- SHS 950 181 2,722

- PVP 500 1,262 18,930

- SWH 575 4,913 73,701

Total 6,357 95,352

Source sales data: Baseline studyNAMREP , Consulting Service Africa (2005)

Emission calculation - GEF increment

New credit available for SETs Amount (US$)

(2004-2008,

New credit schemes Phase I +II) Comment

SRF 1,300,000 New SRF loans (apart from baseline loans)

RE schemes with BW & other banks 2,000,000

Finnish loan for off-grid electrifcation 3,000,000

GEF micro-credit 1,000,000 In support of SRF and RE schemes

Total 7,300,000

Assumption: the availability of new or expanded credit schemes leads to higher sales

of SETs (in addition to baseline sales)

Total amount of Average

Price loans in new system Number ofSET system (US$, 2004) credit schemes price (US$) systems sold

- 50 W SHS 1,100 2,920,000 1,100 2,654

- 660 W PVP 9,000 2,555,000 9,000 284

- 200 l SWH 1,950 1,825,000 1,950 936

Total 7,300,000

Total sales Annual GHG GHG avoidance

in new credits avoidance over 15 years

SET system schemes (tCO2/a) (tCO2)

- SHS 2,654 507 7,603

- PVP 284 717 10,748

- SWH 936 7,997 119,959

Total 9,221 138,310

Calculation of direct emission reduction of GEF alternative

Total sales Annual GHG GHG avoidancein periods avoidance over 15 years

SET system 2004-2008 (tCO2/a) (tCO2)

- SHS 3,604 688 10,325

- PVP 784 1,979 29,678

- SWH 1,511 12,911 193,659

Total 15,577 233,662

Calculation of indirect emission reduction of GEF alternative

Annual GHG GHG avoidance

Market avoidance over 15 years

SET system potential (tCO2/a) (tCO2)

- SHS 9,000 1,719 25,785

- PVP 5,000 12,620 189,300

- SWH 15,000 128,175 1,922,625

Total 142,514 2,137,710


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NAA:ANNEX B PROJECT LOGICAL FRAMEWORKSTITUTIINSTITUTIONONPROJECT

STRATEGY(Objectives,outcomes,outputs)

Baseline IndicatorMid-termIndicator

(end of Phase I)

Final Indicator(end of Phase II)

Sources ofverification

Assumptions/risks

GLOBAL GOALTo increaseaffordable access tosustainable energyservices thuscontributing toclimate stabilizationby reducing oravoiding CO2emissions andimprovinglivelihoods andincome generationof rural people

The country isunable to take fulladvantage of itssolar energypotential.

Based on theannual salesfigures of SETsgiven below, thebaseline of CO2emissions avoidedin 2004-2008 willbe 6,360 tC02annually (or95,350 tCO2 overthe 15-yearlifetime of thesystems)

Consumption ofkerosene forlighting inhouseholds thatuse PV has beenreduced

Consumption ofdiesel bycommercialfarmers that haveinstalled PVP hasbeen reduced

Consumption ofgrid electricity byhouseholds andbuilding ownersthat haveinstalled a SWH

has been reduced

Consumption ofkerosene forlighting inhouseholds that usePV has beenreduced

Consumption ofdiesel bycommercial farmersthat have installedPVP has beenreduced

Consumption of gridelectricity byhouseholds andbuilding ownersthat have installeda SWH has been

reduced Based on the

annual sales figuresof SETs givenbelow, the baselineof CO2 emissions

Supplier survey End-user survey Sales reports

from suppliers NAMREP reports

and project files Official statistics

Governmentdoes activelysupport SETs

Private sectorbusinesses areeager to expand

Financial sectoris willing to getinvolved withproviding creditschemes

End-users arewilling and ableto adopt newtechnologies

Fuel prices andpower tariffs willgo up but not

changedramatically


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PROJECTSTRATEGY

(Objectives,outcomes,outputs)


(end of Phase I)



Assumptions/risks

avoided in 2004-2008 will be at least15,580 tC02annually (or233,670 tCO2 overthe 15-year lifetimeof the systems)

DEVELOPMENTOBJECTIVETo promote thedelivery ofcommercially,institutionally andtechnicallysustainable energyservices by solarenergy, includingsolar electricityproduction (for off-grid lighting, radio,TV, water pumping,and refrigeration)and solar waterheating to thehousehold,institutional,commercial, andagricultural sectors

Number ofsystems soldannually is onaverage 358(2001-2003)broken down asfollows: 210 (SHS),102 (PVP) and 45(SWH)

PV marketcontinues withslow growth

Most off-grid ruralhouseholds do nothave access tomodern energyservices

Number ofsystems sold hasincreased to1392 in 2006which is a 400%increase brokendown as follows:836 (SHS), 324(PVP) and 232(SWH)

PV marketgrowth picks up(as evidenced byincreased loanapplicationsunder SRF)

Number of systemssold in 2009 hasincreased to 3580which is 10x of thebaseline year.Break down asfollows: 1900 (SHS),380 (PVP) and 1300(SWH)

Impacts of NAMREPon end-userrs:Number of

people/households affected

Number of socialservices affected

Number of peoplewith improvedincome

Supplier survey End-user survey Sales reports

from suppliers NAMREP reports

and project files Government

reports Official statistics

Governmentdoes activelysupport SETs

Private sectorbusinesses areeager to expand

Financial sectoris willing to getinvolved withproviding creditschemes

End-users arewilling and ableto adopt newtechnologies

Fuel prices andpower tariffs willgo up but notchangedramatically

OUTCOME 1Built capacity in

Only 4 mainsuppliers of SETs

Increase in RETsuppliers by 600%

RET businessesoutside Windhoek

Survey amongstand reports from

Technicians andstaff is willing to

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PROJECTSTRATEGY



(end of Phase I)



Assumptions/risks

public and privatesectors and inNGOs

that are all basedin Windhoek

have increased atleast 1000%

Level of end-usersatisfaction withinstallation andafter-sales serviceincreased by 50%

Rate of reportedsystem faults hasdecreased with 30%

Turnover of RETsuppliers increases

solartechnicians/smallRE entrepreneur

End-user survey

be trained Willingness

suppliers towork with rural-basedtechnicians

Willingness oftechnicians todevelop theirbusiness

1.1 Trainingprogrammes forNGOs, publicand privatesector havebeenestablished andexecuted

No trainingprogrammes forpersonnel andtechnicians

Some 25personnel fromgovernment,NGOs involved inRET activities aswell as 35 solartechnicians havebeen trained

Some 25 personnelfrom government,NGOs involved inRET activities aswell as 35 solartechnicians havebeen trained

Data and reportsfrom the trainingprogrammes

NAMREP projectfiles

Technicians andstaff is willing tobe trained

1.2 DecentralisedRET companiesare adequatelysupported

Only around 6-9technicians/smallRE companies arebased outsideWindhoek

At least 25% of alltechnicians thatparticipated in atleast one trainingworkshop haveset up orimproved theirservices intosmall REbusinesses;

At least 50% of alltechnicians thatparticipated in atleast one trainingworkshop have setup or improvedtheir services intosmall RE businesses

Survey amongstand reports fromsolartechnicians/smallRE entrepreneurs

NAMREP projectfiles

Willingness ofSET suppliers towork with rural-based solartechnicians

Demand for SETservices issufficient tomake a small REbusiness viable

24


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PROJECTSTRATEGY



(end of Phase I)



Assumptions/risks

1.3 Vocational andtraining centresare capacitatedand providingtechnicaltraining on RETs

No vocationaltraining centre isproviding trainingspecifically onRETs

One vocationaltraining centre(WVTC) has acurriculum onRETs

At least two trainingcentres arecapacitated to offertraining on RETs

Reports thevocationaltraining institutes

NAMREP projectfiles

Training centresare willing to setup a curriculumon RETs

OUTCOME 2New policies, lawsand regulationsand actions insupport of RETsare in place

Apart from MMEssupport to SRFand somedemonstrationprojects, there areno real policymeasures

Policy dialogue(seminars,meetings), basedon RE Action andOff-Grid Masterplans

At least three newpolicy-regulatorymeasures havebeen introduced(e.g. White Paperon RE, provision ofaccess to electricitywith RETs toschools; clinics andmain governmentinstitutions in off-grid areas; makingSWH compulsory fornew public buildingin urban and ruralareas that consumehot water; settingRET and/or off-gridtargets in nationalpower supply;definition ofincentives for SETs;PV irrigation inagricultural

Officialgovernmentdocuments

NAMREP projectfiles

Project files fromNAMREP andREEECAP projects

Government isamenable tochange andwilling toinstitute reformsto level theplaying field forSETs

25


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PROJECTSTRATEGY



(end of Phase I)



Assumptions/risks

programmes)

2.1 Policy andregulatoryframeworks forRE and off-gridelectrificationare formulated

No plans for REand off-gridelectrification

No standards orcodes of practice

RE StrategicAction Planformulated

Off-Grid MasterPlan formulated

At least two policymeasures havebeen introduced

Guidelines onstandards andcodes of practicesare developed

Officialgovernmentdocuments

NAMREP projectfiles

National andregionaldecision-makersare willing tobase decisionson theknowledgerequired oncosts andbenefits of SETs

2.2 Governmentministries andpublicinstitutionsfinance andimplement solartechnologiesand projects

Apart from MME,no ministry orpublic institutionpromotes orimplements SETs

Consultations withministries andpublic institutions(workshop,meetings)

SET-basedfeatures/projectsare integrated inthe plans of at leasttwo ministries orinstitutions

An inter-sectoralcoordinationstructure on RET isproposed

Officialgovernmentdocuments andministry budgets

NAMREP projectfiles

Sectoraldecision-makersare willing tobase decisionson theknowledgerequired onSETs and arewilling tocooperate

2.3 REEE Institute(at Polytechnicof Namibia,PoN) isestablished andfunctioning well

No REEE Institute A REEE Institute isset up andperforming someof its functions

The REEE Instituteis fully functioningand has taken oversome non-corefunctions from MME

Reports fromREEECAP

Reports fromREEE Instituteand PoN

NAMREP projectfiles

Danish-supportedREEECAP projectgetsimplemented

MME continuesto give politicaland financialsupport to REEE

26


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PROJECTSTRATEGY



(end of Phase I)



Assumptions/risks

Institute

OUTCOME 3Increased publicawareness andsocialacceptabilityamongststakeholders

Little awarenessand understandingamong decision-makers in publicand private sectorand amongst end-users

Number and typeof households(income groups)purchasing SETs

Number of salesand/or loanapplications forSETs per type ofcustomer and pertype of SET (SHS,PVP, SWH or PVrefrigerators)

Number of salesand/or loanapplications forSETs per type ofcustomer

Supplier survey End-user survey NAMREP project

files

Market actorsand surveyrespondents arewilling toprovide thisinformation

3.1 Comparativeinfo on demandfor energyservices andcosts andbenefits of SETsis collected anddeveloped

No comprehensiveand comparativedata on demandfor (off-grid)energy services inrural areas

No comparativedata on costs andbenefits (C/B) ofSETs

Study on C/B ofSWH

Study on C/B ofPVP

Study/survey onthe market for off-grid energyservices and C/Bof social andproductive uses ofSETs

Updatedinformation on: C/B of SWH C/BPVP C/B of social and

productive usesof SETs (SHS,PVP, PVrefrigeration) inrural areas

Technical reportsdescribing theresults of thestudies/surveys

NAMREP projectfiles

Market actorsand surveyrespondents arewilling toprovide thisinformation

3.2 Increasedknowledge ofSETs amongnational andregionaldecision-makersand end-users

No disseminationcampaigns and noworkshops ormeetings on SETs

4,000 people havebeen reachedthroughdisseminationcampaigns

300 people havebeen reached

6,000 people havebeen reachedthroughdisseminationcampaigns

500 people havebeen reached

Materialsproduced foreducational andpublic awareness

NAMREP projectfiles and recordsfrom awareness

Willingness ofdecision-makersand privatepeople to investtime inattending

27


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PROJECTSTRATEGY



(end of Phase I)



Assumptions/risks

throughworkshops andmeetings

Number ofdecision-makersbriefed on SEts

through workshopsand meetings

At least 40 on-sitedemonstrations ofSET systemsconducted

Number of decision-makers briefed onSETs

campaigns

3.3 Active networksor associationsin place

No RET networkin place

SustainableEnergy NamibianSociety (SENS)has beenestablished

SENS is fullyfunctional

Number andpercentage of PVsuppliers, NGOs andother organisationsparticipating inSENSE

SENS reports NAMREP project

reports

Willingness ofSETstakeholders tocooperate

OUTCOME 4Appropriatefinancing andproduct deliveryschemes set up andexpanded.

Solar RevolvingFund, MMEsfinancingmodality, isoperational butnot functioningwell

High first cost ofSETs

Number and typeof lendingschemes

Number of loansgranted andlending volume;repayments ofloans

Number and type oflending schemes

Number of loansgranted and lendingvolume;repayments ofloans

A strategy toreduce first cost isin place

End-user survey Government

documents Reports from

financialinstitutions

NAMREP projectfiles

Government iswilling toprovide subsidyand fiscalincentives

Full participationof public andprivate lendinginstitutions

4.1 The SolarRevolving Fund(SRF) has been

82 loans awardedper year

300 loansawarded per year

300 loans awardedper year

SRF files

Government iswilling toprovide long-

28


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PROJECTSTRATEGY



(end of Phase I)



Assumptions/risks

scaled up andexpanded

term subsidy onthe cost ofsystems

4.2 Financingschemesthrough (semi)-commercialfinancinginstitutions forcustomers andsolarentrepreneurshave been setup and/orscaled up

No commercialfinancing schemesin place

Financingmodalities inplace for personalloans (SRF, BankWindhoek) and forsmall REentrepreneurs(Bank Windhoek

Existing schemes(SRF, BW) havebeen capitalisedand scaled up

New schemes withat least one otherbank have beenestablished

At least one schemewith a developmentbank to developRETs andproductive uses

Reports frombank and fundmanaginginstitutions

NAMREP projectfiles

Full participationof public andprivate lendinginstitutions

OUTCOME 5Learning,evaluation andadaptivemanagement

Number of staffworking in MME onRETs is small (3-4people)

No monitoringand evaluationand extraction oflessons learned

Number of lessonslearned anddisseminationactivities

Number of staffworking in MME andREEE Institute onRETs

Number of lessonslearned anddisseminationactivities

NAMREP projectfiles

Lessons learnedreports

Successfulimplementationof all theactivities in thepreviouscomponents

4.1 Adaptivemanagement,monitoring andevaluation

Limited humanresources in MMEto implement REpromotionalprojects

PMU establishedin MEE andfunctioning

Baselinestudy/survey

Project progress

PMU staff absorbedin MME or REEEInstitute

End-of-project study Project progress

reports

NAMREP projectfiles

MME providesadequate co-financing

29


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PROJECTSTRATEGY



(end of Phase I)



Assumptions/risks

reports Mid-term

evaluation

Terminal evaluation

4.2 Lessons learnedhave beendocumentedanddisseminated

No lessonslearned aredocumented anddisseminated

NAMREP Quarterlyand otherpublications

Experiences fromat least 3 othercountries in theregion have beenmonitored/incorporated

NAMREP Quarterlyand otherpublications

Experiences areshared with at least3 countries/GEFprojects in theregion

Lessons learnedreports andpapers

NAMREP projectfiles

Willingness andtime o actors inother countriesto actively shareinformation

30


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ANNEX C. RESPONSE TO PROJECT REVIEWS

STAP REVIEW AND IA RESPONSE

E-mailE-mailMEMOMEMO

Lawrence Berkeley National LaboratoryEnvironmental Energy Technologies Division

Building 90, Room 3058, Berkeley, CA 94720

March 12, 2006

To: GEF/UNDP, Martin Krause, by e-mail (martin.kr

3062 - execut sum - namibia re phase 2 - revision after bilateral april 27w colour coding1

Documents